tv Worldwide Exchange CNBC September 7, 2009 4:00am-6:00am EDT
singapore's charted semiconductor. >> hello, everybody, i'm louisa bojesen, makes a $17 billion bid for cadberry. hello, everybody, welcome to worldwide exchange here on cnbc. very glad that you're joining us today and starting off just glancing at our broader market index. let's switch to cnbc global 300. our markets opened to the up side in europe about an hour ago. higher on that chart and our european bosses are indicating more of the same. a few more gains by the ftse and the cac. seeing a lot of emphasis on the food stock after cadbury rejected this offer from kraft. the question is if they'll come back with another offer. rallying higher by more than 35%
on the open on the back of this bid. the currency markets, we're starts a brand new clean week. of course, markets off for trade today, canada, u.s., and brazil, all out for holiday. not a whole lot of volume in comparison to what is anticipated usually. but nevertheless, still seeing healthy interests in the dollar yen trade this morning, 93.23. 3.28 at the moment, so a couple of ticks higher. how are you, christine? just you and i today. >> just you and me, how fun is that. this is how the asians market did today. a good session so far. of course the market's taking heart from the fact we had over the weekend g-20 ministers, the key stimulus in help to support some of these markets. nikkei up 1.3%, the shanghai market 0.7% higher, that measures to china to up the number of investors and how much
they could invest in china. the housing too up 1.5% and the sen sex up 1.4%. this is how the crude oil picture is looking. pretty range at this particular point in time, up just slightly 34 cents, and brent is also trading higher, as well, fall following in line with nymex. and i'm going to do a quick check on gold, as well, inching closely to what the 1,000 level, up $2.25, $994.5 an ounce. louisa? >> thank you, christine. well, senior executives from russia gathered today in bazille to hold a press briefing. the anti-viral drug has become a blockbusters with projected sales of $1.1 billion. it is russia's fourth biggest selling product, but with rivals launching their own versions, is
tamiflu at threat? more on swine flu and tamiflu, bill burns. bill, thank you for very much for joining us. first of all, let me hear it from you. what are you going to be telling investors today? >> well, i think, louisa, the key point of the meeting today is that we're at a calmer moment, and we're not right up against the heat of the kitchen of a real major pandemic. a lot of experiences out of the last mexican swine flu built on top of that the time that we've had before that with the h1n1 strain, the avian flu. we've been trying to work with the national governments, the national health organization to make sure we've played our role in getting ready for potentially a major outbreak of a pandemic. taking this quiet moment to just try and brief the world's media to ensure as we go into the next
winter we're well-prepared and help them be prepared. >> there are many, though, within the past month or so have come to me and have said well, it's actually not quite as bad as what we may have assumed a couple of months back and in reality most people if they get ill, catch the flu, then they're sick for a couple of days and then it goes away again and in reality the side effects of some of these flu treatments, that's a larger worry. >> well, the interesting thing here is, until there were products like tamiflu and the competitor product from glaxo, nobody had studied the treatment of influenza seriously. what we have with influenza, is a delirium we all feel when we have to go to bed for those few days. what tamiflu can do is reduce the hospitalizations by more than 60%, which is really important if we're in the midst of a major pandemic.
and it also shortens the severity and duration of the flu. and the side effects are no more than one experiences with placebo, a lot of side effects from influenza itself. i do think there's a real role for this product and that's why the w.h.o. have been recommending it to governments for quite some years. >> hey, bill, this is christine over here in asia. i understand in hong kong we have health care workers, don't want to get treated because they're afraid of the side effects. what can you tell us about the side effects? >> well, i think, christine, this is where also the media has its part to play. having seen some of the clinical experiences, people then assume what they sue with tamiflu does not happen with regular influenza. what i can reassure your readership, the side effects are no more no less than what we experience with influenza itself. clearly, what we also need to make sure of is people are treated properly, promptly, and
that's where we work with national governments and the medical community to try and make sure it's handled properly. >> what's the demand can you tell us coming from emerging markets and here in asia? are they getting enough stockpiles in place? >> well, i think there's a very mixed bag in the way in which governments have become prepared in working with the world health organization, we've donated more than 10 million treatment courses they've been punling towards the less developed nations and those more at risk. and we've put in place now for the countries that are very poor, a special way of approaching the price of tamiflu to make it more affordable for them, alongside the free donation to the world health organization. so that's what we can do as a company. i'm also encouraged to see that some of the developed nations has also put some material into asia, for example, from japan and other countries. >> bill, it's louisa again.
how do you as a company where you have a drug like tamiflu that has become your fourth best selling drug by chance more than anything. nobody was interested in it back in 1995. how do you prepare yourself for when the patent runs out eventually and something else has to take the place of tamiflu? >> well, i think, louisa, the interesting thing about tamiflu is we've been trying to guide the markets for quite some time now that this is an extraordinary event and we're trying to put an extraordinary support to prepare the planet. our fundamental business is still more than half of our revenues are in the treatment of cancer. then also an important franchise in hepatitis in the treatment of transplantation patients. so the underlying growth of the business is still strong. and the patents on tamiflu go out to about 2018. but i do believe, hopefully, we've got all of the governments of the world ready long before that. it's rather an extraordinary
burst of business rather than something that is long-term sustainability. >> bill, we're also trying to figure out how much further we have to go in the recession or whether or not the worst is behind us. in your global view, where are we in the recovery story? >> i think in recovery from this -- shall we say the problems of the financial community. what i'm seeing so far is that health care have been relatively untouched. and that's because really cancer, hepatitis, transplantations are no respe respecters for world crisis. and i do believe there's been remarkably little impact. that doesn't mean that at some point governments are going to have to say how do we pay for bailing out the banks or handling the car industry. but at the moment for health care, we seem to be less cyclical in our nature to the financial crisis and other sectors of industry. >> bill, thank you so much for
being with us today. bill burns, ceo at pharma at roche. moving on and joining us for market strategy, senior editor at research partners. and let me mention if you have any questions for our guests today, send them in email@example.com. jacob, let's kick off with you. welcome, good to see you. and so this morning, we're sitting, minding our own business. and suddenly you see this large deal being proposed of kraft wanting to take over cadbury. this is just like the market needs, another round of m & a to keep that rally going. >> absolutely. i think there's a series of upset risk here in terms of markets going up higher than where we are. obviously we are at highs for the last 6 to 12 months. but what's happening here? i think that certainly what i call implicit puts being put out
by the g-20, commitment to be strong here to help the markets, provide electriciliquidity. that's the first one. unemployment worrying, but it's getting better. it's interesting where we are in the recession story. and thirdly, good stories coming out. do you know a company's doing transactions again. so i think if we all put that together, i think it looks very positive. we have the september worries. people aren't quite sure this is a good idea. i think there's an up side risk here for the aforementioned reasons. >> okay, pierre, jacob says there's an up side risk here. would you agree with that? >> yes. if there is a risk, it'd have to be to the up side. the core market, the news today is hard to make any sort of
long-term predictions because the u.s. is closed. but i definitely agree with jacob on the idea that the recovery is fully underway. most investors we talked with are still under invested. there's an up side potential. >> pierre, this is christine here. if you look at gold, some say it's a precursor of equities falling. you don't subscribe to that view? >> no, i don't think you should make too much of the gold price movements either. a lot of people attribute many things to the movements in gold. and i'm not so sure it's a signal of anything anymore other than some speculation that gold will be higher in a few weeks. typically this is the seasonal point where gold demand for jewelry on the marginal level starts rising a bit because you have christmas, weddings, et cetera. i wouldn't be surprised to see gold, you know, perhaps
breakthrough 1,000, in which case, it's going to trigger investment. that doesn't mean we have inflation or anything like that. >> jacob, do you agree with pierre, if gold reaches 1,000, would you be a buyer of gold? >> i think gold has to become really a tool of speculation rather than being a commodity, being driven by demand and supply of the understolying mar. i had a friend in the gold trade and he says he doesn't like high gold prices, doesn't understand why prices are high. and he totally agrees with me that this is pure financial speculation or investment whatever we are to call that. but it's not underlying demand, but it doesn't matter. i think it still means that prices can go up because there are other reasons for prices to go up, such as technical. and on the investment because so called allocators want to have
something in commodities. >> where do we invest full recovery, though? >> i think you ought to be in cyclical. you ought to be in the stocks -- i don't think you want to be in defensive. if you're in the defensive, you're not going to make any money. i think it's clear we've seen it over the last, i would say two months that the stocks that have been hammered over the last two years are those who are coming back. so unfortunately, the end of the story you have to go into the high beater stocks, the stocks that have been that are cyclical. i city think it's the cyclical story. if you're in defensive, the pharmaceutical in some are not so excited about this. these are great companies as such, but from an investment point of view to capture most of the up side, i don't think you get it. >> and pierre, where do we we invest our recovery?
do you share what jacob says? >> i share some of the sentiments. me sitting in asia, the past four or five months we've had incredible performance of asian assets and to the point where one starts to wonder -- historically this is the point where in the recovery when the u.s. starts to come back and people start to reallocate towards more mature assets, et cetera. so you have to decide if you're in asia, do you invest on the return to the mean? in which case you may want to move out towards the u.s. or do you believe that the asian story is for real and is a momentum-driven trade. i tend to believe that the asian rally does have another leg to it. aside from the dash to trash type that jacob was talking about, which is definitely true, i think that there is a long-term very exciting story for asia and the global rebalancing we've seen is just starting. and i don't see that you're
taking too much risk in investing in good quality asian companies. >> pierre, thank you very much. pierre gave, head of asia research from gaveta holdings. and david schmitt, we appreciate it. moving on, finance ministers and central bank governors of the g-20 have called on banks to increase their capital buffers to protect against future failures and losses. meeting ahead of the summit takes place later this month, policy makers agreed that banks should hold on to more of their profits and develop living wills to plan for their unwinding. they also said they do not plan to remove economic stimulus until the recovery was well entrenched. the g-20 finance leaders in the financial system, however, they did stop short of calling for caps. martin batarat joins us, our
colleague. we still don't know the details of how they're going to unwind the stimulus packages or when. >> or when, exactly. that was one thing they were able to agree on. and i have to say it's probably the most of the agreements. something that's universally agreed on and not just those representing the g-20 nations this weekend. i think more came into the concept of numeration for the financial industry. talking about bonuses clearly and talking about caps. but the two words are connected. in many respects, you could argue and he did in the press conference that even banks that did not take money from the public purse were in some way linked in terms of their own health and stability to public taxation. by that i mean you get some backstops even if you didn't take money straight into the balance sheet. so all of this interlinks risk and reward and ultimately global recovery. and this is precisely what the president of the ecb was
alluding to when we caught him in the hall way across the street from westminster here in london. >> -- and what is extremely important for us, particularly, is that there is no incentive to behave properly, to take risks that would not be proper, and to create the condition to have few problems of that kind. >> i think another problem that exists, as well, is the assumption that maybe overregulating the industry now would snuff out the small bits of green shoots we're seeing in the global economy. maybe you could argue there's a balancing act preventing a crisis down the line or focusing on the previous crisis today and risking the global growth story. that was a question i gave to the finance minister of france. here was her reply. >> i think what will drive growth is the creation of actual value is private companies investing, picking up -- taking
the baton from the public because at the moment we're just injecting masses of public funds into the economy. and that's what we mean by growth. it's not huge bonuses. >> this is just a growth bonuses and financial system or one that is actually under the hue and cry of the public sector. those being, of course, finance ministers. really where the conversation left off, the financial stability board is going to report in pittsburgh as to the precise detail of how bonuses may or may not be capped. this is going to be a conversation that will go from pittsburgh and beyond. >> what's your view on how it's going to pan out there? >> i think pittsburgh, christine, to be perfectly honest is going to be a summit focussed on global trade. and two reasons. firstly, it's the one aspect of the global crisis that hasn't been addressed since the collapse of lehman brothers. probably the worst on record. and i think there was one thing you have to address by the members there in pittsburgh. secondly, pittsburgh is the heart of the american industry.
and i think the concepts, support and making sure in some respects that we don't get involved in any kind of protectionism, we all remember from our economics and history lessons from back in school that the smoot tariffs enacted elongated the depression and had spillover complications. not only for the u.s. economy, but for those around the world. protectionism needs to be avoided but trade finance needs to be engendered. i would imagine beyond numeration of banks. again in pittsburgh, the heart of american industry. >> i like spillover complications as opposed to spinover. martin, thank you. and martin will luckily be back with much more on the g-20 during the what? next hour and a half or so. you can of course, get more news, videos, and blogs. head on to cnbc.com. and coming up here on "worldwide exchange" the economy
is beginning to grow but then again, so is unemployment. is there such a thing as job recovery? g-20 takes aim. pushing for stricter rules while london claims it'll be impossible to police. and m & a is back on the agenda. kraft tabled a 10 billion pound offer for cadbury. all the details worldwide at cnbc. firstname.lastname@example.org. i'm here on this tiny little plane, and guess what... i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate.
hello, welcome back, on to our global ground above equity markets. joined by becky looking at the market. >> let's see that. it's pretty exciting today, i have to say. it usually is, but particularly today, 1.5% higher roughly. and cadbury is the big story. shares of cadbury almost 40%. kraft in the u.s. that it was 7.45 a share, but the stock has risen above that offer price. cadbury rejected that approach from kraft. still hoping they'll be able to come to some kind of agreement. and cadbury came out with a few
comments saying they believe that the offer undervalues the company, they're confident in the growth prospect. i think this story will have a little way to run. if these two businesses come together and come some kind of arrangement. also london very strong today, the shares of that company higher by 8%. and the observer newspaper reporting that they've asked the conduct the study. so plenty of m&a activity. what's going on in germany? >> well, we are very close to session highs, up about 1.5%. and i have to say the volumes are better than i would have expected to be for a u.s. market being closed and that really influences most of the time the volumes here, but the rally is going on. we started last friday, really, very well indeed by 3.6%. that is one of the getting an upgrade from deutsche bank.
watch out for that one. interesting the deutsche telecom story. there's a lot of questions in the mobile unit. i'm waiting for a callback. bmi unit is being talked about as a potential sales target at the moment and not looking at it. all the options are open. however, i think i get the feeling if the money is right, they will tango. over to paris now. and in paris, the banks are underperforming the market today on the back of the g-20 finance, which failed to find an agreement on bonuses cap. the times of london is reporting today that france may go alone on that story in the decision to cap bonuses in the country, which could make the banking sector less competitive in france. almost unchanged. vp also undercut, the airline is up 1.5% after the announcement
that the stock will leave the index on september 21st. it will be replaced the oil service company, the stock is up 2.5% right now. and let's have a look also the company could sell its first jet outside france. the french president, sarkozy is in state and just before this the president -- france is trying to sell 56 jets to brazil for $4 billion euros. now let's have a look at the asian market with adam. >> thank you very much, ste fon, the asian markets were swept higher today thanks to the gain on wall street on friday. the payroll may not have been welcome news for the 216,000 people who lost their jobs, it was good news for the equity markets because the export dependence of a lot of these
asian on the economy. leadership in the shanghai in the morning with this follow through buy-in given we had the new rules change that came in after the bell on friday. we lost a little bit in the afternoon trading session in shanghai because many of the analysts were saying it's more symbolic in terms of changing the investment rules and lifting the caps. meanwhile in hong kong, a pretty solid session up 11.5%. gain in banking stocks in hong kong as well as also the gold stuff. bouillon prices about $7 billion away. investors seem to be blowing into gold shares, christine in asia. so overall, pretty good session. >> thank you, adam. well, coming up on worldwide exchange, we will continue to look at ipos in india. kicking off subscriptions for its $500 million offer. will mumbai see another disappointing day?
bojesen. in europe, m&a has been focussed as kraft makes aed by for cadbury that the candy maker rejects claiming they're undervaluing its business. and there's quite often the case, isn't it, when you get the first bid and the company says, no we're not interested because we're worth more. the global 300 index indicating our markets opened slightly higher this morning and bouncing right and .1%. not a lot of change in the last half hour or so. and showing you gains across the board higher by 1.25% or so. we're seeing quite a bit of buying in the banks, as well, as some of these food companies getting a boost like nestle on the back of more speculation that we could be looking at further m&a activity in the food and drink sector on the back of this very large proposal. kraft wanting to take over
cadbury. the markets are looking like this, dollar yen, you're also looking at the euro trading up against the dollar by .4%. despite the fact no real conclusion, i guess you could say was found after the g-20 meeting from this weekend. and we'll be talking more about the findings here within the next hour and a half or so. christine, lovely to see you again, just you and i due to labor day holiday in the u.s. afoot. >> it is. we are the only ones working these days, i think, kind of. the pledge you mentioned, the stimulus measures that g-20 ministers were talking about helped to provide a lift to sentiment. nikkei is up 1.3%, the kospi, a lift basically from new rules that allowed -- allowed foreign investors to up their limit and
the hang seng is up 1.5%, and ipo, we're going to talk about later on in the show. let's take a look at the bund, the yield on the bund is at 3.26%, up marginally. let's cross i don't ever into india. let's join, live from mumbai for the india business report. hello. >> 47.15 is here right now conclusively holding on to that 1.5% gain mark. back about 15,900 mark, all in all, good days. but the action is in the broader markets which i'll talk about a little later. but a couple, there's going to be implemented october 20th, but two new stocks are indeed idfc and jp associates. holding up very smartly in trade, although doesn't trade the b.e. or the eps.
before that, of course, some important news actually coming in. they have signed a 50/50 joint venture with a chinese company for biostimulus. they're looking at bringing it up by 2010. that is one pharma measure holding up smartly in trade. besides that news coming in over the weekend. holding up very smartly in trade. now set to be the new corporate and open up 29.4% stake is going to be clocked at 1.20 apiece per share will open on october 31st. it's the entire oil marketing, which is really seeing a flurry of activity hp, bp, all holding up strongly, and the rough-off effect is perhaps all of india, the ipo kicked off within minutes of its open. and the view on the street is pretty much divided on this particular ipo.
some do say the issue is quite attractively priced. the others see the fair value only around 900 apiece, but the entire market is holding up very smartly. and back to you. >> live from mumbai. ayesha was talking about the oil, with more on that company is the managing partner, asian alternative consulting. jay, good to have you with us. you heard what she was talking about. is it because valuations are looking attractive? as attractively priced? or is it because the ipo sector in india is picking up? >> the ipo sector has been picking up in line with the way the market has done. i feel a little bit worried when this kind of exuberance. there may be a selloff, not necessarily due to what's happening in india, but overall, the s&p might be getting into some kind of consolidation. but as far as the ipo is
concerned, from a valuation perspective, i think it's okay. it's sort of like a mini version of ongc. if you see the two words, oil and investor. you think oil's going to go $100, you want to be in india, that's where you want to be. shorter term, you might not make so much money from it. but i think you'll be find longer term if you can withstand the volatility. >> when it comes to ipos in india, you said that basically this could be a sign of selloff down the road. if we do get more ipos coming online and do support the indian market, would you be encouraged to get into the ipo sector in india? >> both in india and china, they have always, you know, when you get this kind of sort of irrational exuberance that's commonly used phrase. both of these countries have had slews of ipos where people have ov oversubscribed and valuations go through the roof.
and that always inevitably ends in a selloff. i would still be a little bit cautious. if you're a shorter term investor, that's fine, but longer term, look to get in at lower levels. >> jay, hi, it's louisa in london. the ipos that we're talking about now. are these ipos that have been delayed due to the financial mush that we've been going through and now starting to come to market? or are they new ipos? >> some of them have been delayed. i think, you know, last year and the year before last there was a great desire by indian companies to seek advantage and raise money. and a lot of plans got delayed. some of these are in line with, you know, with what the market has been expecting. basically investment and infrastructure, energy, and some extent in consumers is what the economy needs right now. and that's something promoted by the government. agriculture to some extent. government has been supporting the agriculture sector in a big way. so, you know, i think that
capital raising is needed in those sectors and investors would also benefit from that particular capital raising. but, you know, i think as a side, one's got to be careful of this kind of speculative element, which in most parts of asia tends to blow valuations off considerably. >> how you view the ipos, and some of the larger chinese ipos where you see oil and gas, you see china, you see infrastructure projects, and you think, well, how could it possibly go bad? >> well, you know, china it's probably even more extreme version of volatility aisle describing. if you look at the volatility of the shanghai compared to the sensex. the shanghai is about 50% for a 30 day volatility risk, about 30% for the indian market. if you're going to be involved in ipos, you've got to be ready for that event which might drive
the market rapidly up or down. so if you've gotta temperament to take that, then china is where you go if you want the added volatility and risk. india less so. but you know, these are both extremely rapidly growing economies. you know we're still talking about over 6% or 7% gdp growth. that's not really the debate. it's really about whether you can withstand the volatility or not. >> jay, whether it's china or india, when you come to the markets raising ipo, you're basically raising cash on the market. the other avenue is to go to the banks and take some money. what does this say about bank lending in particular? will that take some of the heat away from the banks? >> well, you know, we've had this phase in the last nine months where banks totally stopped lending, both in india and china. and both markets have experienced some, you know, some warming up of the loans market. and i think both china and india, was china, you know, last couple of days we saw some words
from the regulator saying, look, you've got to be careful here. you can be over the top as far as lending is concerned. having said that, i think both china and india are going to see quite considerable growth in loans. loan growth is going to be quite good in both those countries. and i think, you know, that will -- i think it goes in line with this sort of warming up of global economy, the global economy that we're seeing right now. >> all right. thank you very much. good talking to you. and that was the managing partner asian alternative consulting talking to us about ipos in india as well as china. other stories we're watching today, mcc raising up to $5.3 billion via dual listings. the firm plans to sell $2.5 billion worth of shares in hong kong in what could be the territory's biggest ipo so far this year. and the rest in shanghai. sources say shares will be
priced at 5.4 n. the company will use the proceeds of the ipo to fund payment of mining rights, bank borrowings, and potential acquisitions of mineral resources. well, another story, watching state fund advance technology corps or atic says it offered to pay $1.8 billion to buy singapore's charted semiconductor. the offer of $2.68 a share represents a 40% premium to charge 30-day volume weighted average price. the transaction is expected to close during the fourth quarter of this year. but is expected to subject to regulatory and shareholder approval. atic says it may merge charted and global boundary, a joint venture. checking semiconductor shares how they're trading in singapore down 2.3%.
elsewhere tomashiba will develop next generation chips in a move to cut costs. according to the world's number two maker of nand/memory trips is in talks with semiconductor and global foundries about the move. the maker reports suggests the alliance will kick off in april. toshiba shares are up, 482 japanese yen. the chip company started the sale process with $2.6 billion stake in the memory chip maker. the 28% stake is up for grabs. economy helped by several financial firms including career exchange bank. hynix plans to secure a buyer by the end of the year. the company's widely expected to swing back to an operating profit in the current quarter helped by recovering chip prices.
shares of hynix ended high 0.7%. louisa? >> yeah, they may ended higher, but not as much as cadbury. cad bury's soaring after the maker received a takeover offer from kraft foods in the u.s. the board at the uk confectioner has rejected the 17 billion bid from this american food giant. saying that the kraft offer fundamentally undervalues the business. the u.s. company says it's committed to working toward a recommended transaction. while g-20 finance ministers were meeting over the weekend, other prominent names in the business were gathering. for the annual forum. among the topics on the agenda was the end o the global economic crisis. the ge chairman spoke to cnbc about the threat to recovery. >> i see that it's been weak in
advance economies. i have a more optimistic look for emerging market companies like china, brazil, other emerging markets because this country high savings rate at current did not have the same successes of leverage for the financial system. therefore, they're going to grow at the robust rate. but even the growth rate is going to be somehow constrained by the weak economic growth of the advanced economies. >> the european union is hoping to ease tensions with the u.s. over state aid to the respective aircraft manufacturers, airbus and boeing. the trade commissioner says the u.s. and europe need to ensure they maintain competitive aircraft industries. they come after reports of interim ruling on the dispute. some say the decisions will partly uphold washington's complaint that $15 billion in european loans to airbus constituted illegal subsidies.
women employed in the financial sector in britain are getting 80% less in performance-related pay than their male colleagues.ñw 80% less, that's a finding of the first major survey of its kind carried out by the uk as a quality and human rights condition, which called the results shocking. it also found a 39% difference between men and women basic salaries, 39%. the commission says that the pay patterns started recruitment where women are employed on less than men and continue from there with relatively few women reaching the top ranks where the biggest bonuses are paid. christine, a couple of facts then. in 86% responses to the commission, women had lower starting salaries on average than men starting in the same period. i was asked to do an interview on this a while earlier by a radio program this morning. i read out all the facts to me and said is the city of london sexist? what can i say, no, can i give a
lofty answer and say there's always room for improvement? if these are the facts, the answer would be yes, wound it, surely? >> well, depends -- i guess depends on who is in the survey, isn't it. you could survey a whole bunch of people and leave out the rest. these surveys are a bit, you've got to take both sides of the coin. >> i know this is the equality and human rights commission. the equality and human rights commission have analyzed data from these companies employing almost one quarter of workers in the sector. it's a staggering figure, though, to be looking at if payments and bonuses being an 80% difference. it's your daughter, your wife, your mother, working super hard and your son comes home and he has a lot more in his pocket than women. >> i think you should go on strike. >> i love my job. >> go on strike.
all right. well, you can get more news, videos, blogs, anything moving market. and there are plenty even though the u.s. is closed. you can find them all at cnbc.com. coming up next, m&a dominates in asia, and europe, aig sells part of the management business. while kraft tables a $17 billion offer for cadbury. is this a good omen for the market? and plus, also, the currencies coming up after the break. get some viewpoints on where we should be trading, where we should be putting our money.
hi, welcome back. well finance ministers and central bank governors have called on banks to increase the capital buffers to protect against future failures and losses. meeting ahead of the summit in pittsburgh later this month, policy makers agree that banks should hold on to more of their profits and develop living wills to plan for their unwinding. they also said they do not plan to remove economic stimulus until the recovery was well entrenched. if the uk, the former mpc member spoke to cnbc about the effects of quantities of easing on the economy. he told us why it was too early to contemplate an exit. >> that's exactly the right call. i think we're very early days.
quantitative easing is again, pretty early days. interest rates have been held low and we're seeing some mixed signs of recovery. it's not very, very strong. some mixed signs. i think the danger is we assume everything's wonderful and remove the stimulus. and said today or yesterday that we need to be very cautious about taking the stimulus away. and i agree with that. these are very early days. if there are green shoots, we need to separate them from the weeds and we need to look and watch and wait. and the caution we have to take is, if you act too soon, you can kill off the growth. and if you sit and wait and inflation starts to run, then you know what to do. reverse and raise interest rates. so it's early days, stand ready. >> with qe working, is it working in the way it's meant to? and what do you think the net
result ultimately. the dollar rising, but are we getting the right result here? >> well, again, it's very early days. people have really very little experience in this. m-4 is obviously some of the things you want to look at. you want to look at bond yields, but i think we have very little experience at this. this hasn't really happened for our lifetime. so it's early days and most of the economic model that the people are using don't actually have quantities of money in them. so they produced a forecast yesterday, but weren't very good at forecasting what happened on the way down. and as most of these forecast models don't have a financial sector in them, don't have quantities of money in them. it would be like glorified guess work. and so you have to be cautious. you have to worry about the low side risk and wait and watch. and i think policy makers around the world have got it right. the ecb's got it right, the fed has done and the bank of england's got it. they all have the same kind of view. wait, watch, and we'll see and
worry a lot about the labor market. the labor market is still in lots of trouble around the world. >> and with that, we need to look at the currency markets now as promised. and you've got a bit of movement still obviously in the dollar yen as per usual, higher by 1/5 of a percent. so fiscal and monetary policy is still expansionary if need be. does that mean we sell the dollar in relation to some of the higher yielding currencies? >> well, you know, quite possibly. and if you look at the markets today, we've seen back out years highs, new zealand moving higher. the relationships between currencies and stock markets have been simplistic. on the back of the g-20 statements, you've seen the currency market move into higher risk. and currency so, yes, that's that knee jerk reaction.
but longer, it's difficult for the market to determine whether or not the euro's going to break out on the up side or whether or not the dollar is going to be the main beneficiary. going back to the comments we've just seen and that's the really interesting one. your interviewer mentioned the uk was going higher. but last week the bank of england was slightly different. they took out in one series the effects of financial intermediaries. and once you do that, it really is quite weak relative to the normal. the bank of england's been looking at that number for at least a year and a half and that suggests to me that still the money is broken, still no inflation in the system, and still, therefore, interest rates and policy from the bank of england and other countries because of situation similar is going to be accommodated for a long time. >> why did they take out -- >> i think the financial intermediary has been changing
the look of this data. if you leave that in, there's been a nice recovery recently, which suggests perhaps the constant easing programs are working. once you take that out, we can add approximations for a while. and then you see, it hasn't yet had this impact. and i think that's something we ought to be addressing. the bank's been looking at that data thinking it isn't rising. you look at this major, and that probably explains at least in part why they did that a month or so ago. and that probably explains or probably will predict the fact that interest rates in the bank of england will be low for very long time yet. so that's really not good news. >> jane, this is christine. and speaking of interest rates, you know that pick up of data in australia, a lot of people are speculating they could raise rates this year. has the aussie peaked? >> that's been talked for quite
a long time. the policy meeting at the beginning of last week disappointed many of the hawks. up until then, many were thinking they would hike actually next month. now they've pulled that back a little bit. but if you look at the australian data. they had a really good upturn in gdp. they avoided recession, they are going to be one of the first central banks that will be able to hike rates. so again, yes, expect that they could well do it before the end of the year. but again, if you look through that rhetoric that ahad last week, that policy is still appropriate. even they with their relatively good economic news and proximity to china et cetera was still a little bit cautious. and that is the tone, i think, coming through, from the fed where they're worried about the effects of joblessness and consumption. and i think that's the message we can expect from the bank this week, as well. >> all right, jane. thank you very much for your views. good talking to you, jane.
i'm christine tan, taiwan's premiere has to take responsibility for the handling of typhoon marakot in august. in europe, the m&a is in focus, kraft making a $17 billion bid for cadbury that they say fundamentally undervalues its business. welcome, everybody. welcome, welcome, to the second hour of "worldwide exchange." keep your e-mails coming through. email@example.com is the address. and we've also got a guest host lined up ready to answer many of those questions for you in just a moment's time. but let me show you the broader markets, though. flip to cnbc global 300. begin end indicating we've seen a little bit of a bounce on the open. european is higher by somewhere around the 1% mark across the
board. even more when it comes to the dax and cac. canada, u.s., and brazil all out for vacation. no trade results there. this week, it's worth mentioning too that we've got a number of treasury auctions taking place. in fact, we've got $70 billion worth of treasury auctions, which means according to my calculations that it's approximately $1 billion more than we're seeing than last time. that could garner interest in the markets once we see that kind of kicking off. christine, hello, again. >> hey, louisa. here in asia, pledged by g-20 ministers to keep stimulus going. kind of helping markets out here in asia. the nikkei ended 1% higher, 1.3% to be exact. the shanghai market up 0.7%. we had news on friday about china allowing upping the limit, rather for foreign institutional investors to invest in the stock
market. market pulling back just a little bit, though. the hang seng is up 1.5% and the bombay is up 1.6%. crude trading around the rages of $68 a barrel, $68.35, up 34 cents and brent trading a little below that, 6.67. right now trading at $67.48, this is how the bund is looking. the bund marginally are lower, 3.6%. and this is how the u.s. tenure is looking. the market is closed we are not looking at that in this particular time, 3.45%, that's for the ten-year note. louisa, over to you. >> excellent, thank you, christine. well, as said our guest host has snuck into the studio, head of investment at ecu group. phillip, welcome. >> louisa, how are you? >> i'm very fine.
very fine indeed. john seems to be fine, as well, one of our viewers he e-mails and says when is the bank of england likely to stop printing money and bring the stock rally to an end? >> not for the foreseeable future. why would they? you've got a situation, i believe where more and more public is going to be required in the short to medium term to be issued and that the central bank is going to need to continue buying that, otherwise it forces yields up. if mortgage rates go up, you don't get an asset price inflation and recovery. and if you do want consumer spending and you need consumer spending to generate economic growth, someone's got to buy something at the end of the day. the consumer's that person. if that consumer isn't able to buy because their incomes aren't going up and their incomes won't go up because you've got a global labor glut, which is forcing real wages down, then you've got a problem. so many ways to put money in a consumer's pocket is to boost
the value of the assets and in the uk, those tend to be property and equities. >> so far, though, it seems this jobless recovery is more or less okay on track. we haven't seen any type of indication that the jobless recovery isn't going to happen. >> well, last time i was on the show, louisa, i spoke to ross and said, look you've got bears and bulls spreads here and both are probably going to be wrong in the short to medium term. what you're going to get is a cool-type situation, neither hot nor cold. down the road, problems potentially materialize. and in the short-term, there's not question of doubt in my mind, you've got a reinflation narrow story, and it's very clear cut to me that it's the bears that need to make the case to be bearish. i don't need to make the case to be bullish at this point with zero interest rates, massive fiscal push and people get bored doing nothing and favors getting crushed at 0%.
>> china raising the number of foreign institutional investors that can invest as a foreign investor, does that appeal to you somehow? >> not particularly, i think the story is very akin to the racetrack in hong kong, christine and i don't think it necessarily reflects the economy. there's a very big discrepancy in what's going on in the entrepreneurs economy and the stock market which is really nothing more than, as i said than a betting game. >> well, you're not interested in china. what places or markets in asia would you be interested in? what would you consider a good buy in asia? >> i'm not saying i'm not interested in china. it is the story, likely to be the story, the dynamic that makes the change in the global economy. allied with india and other large emerging markets like brazil. but in terms of asia as a whole, i think -- i do believe it will
need to be a rebalancing story. the export model of asia has come under threat and i think it's going to be a sustained, threat, christine and those economies will do better. the problem with that lovely thesis, it's very hard to generate domestic demand when you're paying slave labor wages, which is what most of asia does pay, hence keeping cheap, cheap production and therefore cheap exports. >> a number more of viewer e-mails, phillip. p.j. writes in ses cadburies is no worse for you this time of morning than later. thank you very much. that was direct relations to seeing sweets roll across the screen a few moments ago. i do want to talk to you about gold too. i'm quite excited about this. it's not every day we have people bringing in real gold into the studio. let's get your thoughts on gold first. the rally we've seen in gold, is it viable?
is it sustainable? let's see what you brought in, as well. >> people have got the gold story very wrong, i think. they've got the gold story very wrong for a variety of reasons. but they still don't see gold as a currency, i do, and i prefer it to paper. if you do see gold as a currency, the question i get is how do you buy? and i recently found the answer. the birmingham mint, the only mint in the uk has produced this wonderful piece of gold. and it comes in a beautiful credit card and you can hold it investment value, that's no tax, and it's www.birmingham/mint.com is the way to acquire it. this is a one troy ounce piece of gold. and it's the way you acquire gold. why would you be acquiring gold right now? because there's a reinflation story going on because of the debasement story going on and gold is going to go to 2,000 by the end of 2010 has been my long
held forecast and i'm more certain of that today than i was even a month or two ago. >> and for clarity, you hold gold, you're long gold? >> indeed, why wouldn't i be? i have been since i've been appearing on this show and i've increased my holdings because it's in something you can trust. it doesn't have debt associated with it, a limited amount of supply, production is declining relative to demand. it's a one-way bet. particularly when you look at the situation where central banks are going to have to keep printing money to get the reflation story into consumer's pockets. it's the only way it's going to happen in the near ter. and therefore, i could really see in a synchronized world where gold can go to my 2,000 level and you don't see a crash in the dollar, just a debasement of most currencies. >> we'll get to eric's question in just a bit. i've told the gallery to clobber
you out by the elevators. it isn't every day we have a gold bar in here. phillip meduca, still with us this the studio for the remainder of the hour. still to come, g-20 finance ministers and central bankers met in london this weekend. but banker bonuses was the issue generating the most heat. we'll look at the backlash after the break. he ran off with his secretary! she's 23 years old! - oh, come on. - enough! you get half and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah-- his and hers. - ( crowd gasping ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion. - ( chirp ) good to go. ( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( crowd gasps ) - ( chirp ) joint custody. - phew! - announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. , hard of hearing and an people with speech dischities accessac.sprintrelay.com.
hi, everyone. finance ministers and central bank governors of the g-20 have called on banks to increase their capital buffers to protect against future failures and losses. meeting ahead of the summit in pittsburgh, policy makers agreed that banks should hold on to more of their profits and develop so-called living wills to plan for their unwinding. they also said they do not plan to remove economic stimulus until the recovery was well entrenched. discuss ways to curb excessive risk taking in the financial system, but they stopped short of calling for caps. martin's back in the studio for more on the g-20 meeting which you've been covering, martin. >> yes. >> they didn't call on any caps and we keep asking whether this bonus chat is a red herring. >> it's hard to know. i think ultimately they tried to give us things they had agreement on. that was probably more easy of
the two tasks. now was the time to exit or indeed tighten monetary policy. but it won't be long before it is, particularly when you're looking at economies moving at different speeds. you can collect that consensus this weekend without much trouble. you might have a more difficult time doing that in january of next year. but beyond that, again, some contentious issues left on the sidelines to develop with a bit more detail. in pittsburgh, probably all said, not a bad weekend. kind of the question i put to the finance minister of sweden. here's what he had to say. >> well, i'm quite happy. i think we made substantial progress on several of the key issues. i was worried coming here that we wouldn't be able to find a good solution in terms of bonuses and renumeration. i think there are measures here that will set the whole issue in a well structured and ordered way. there could have been more progress, but the fact we have an agreement that is
transatlantic, is a step forward and that means we have a leveling playing field in the situation which i find very good. >> without being overly cynical, some would say that the agreement is very much akin to the agreement that the sun's going to rise tomorrow. no one was prepared for the exit of stimulus strategies at the moment. and i think having an agreement on that and maybe not such a concrete agreement on the more contentious issues might make some suggest that the weekend wasn't quite the success it could have been. >> well, there were many problems when we came here. i think the fact that we are now united in the discussion that we need an exit strategy, that is something, i think, is very good. the fact that we are in a precarious situation. and we are just coming out of what probably have been the worst crisis in 70 years. and i think it's quite obvious as we need expansionary fiscal and monetary policy ahead of us. >> no question about it. we zil have contentious issues left to form a little more detail. that is the concept of bonuses
and whether there should be individual caps, right down to the trading desk, how much somebody can make versus a cap that's more focussed on the pool of money available for compensation at the end of a given year and linking that to bank capital. i put that to the french finance minister as to whether or not the g-20 was reluctant for fear of snuffing out the small green shoots that we do have in the global economy and working later to prevent the next financial crisis. she wasn't having it, though. >> i don't think high bonuses will actually drive growth. i think what will drive growth is the creation of actual value is private companies investing, taking the baton from the public because at the moment we're just in je injecting masses of public funding into the economy. that's what we mean by growth. it's not huge bonuses. >> but growth without question has been linked to the previous
shadow banking system and the creation of credit that it was evolved with. ultimately maybe you could argue you had this super charged engine next to the economy that was giving it the rocket fuel that created the dynamics for an enormous expansion of gdp in the last 8 to 10 years. you don't have that super charged engine anymore regardless of what you say about bonuses in the financial system. shadow banking created a ton of credit. and for the first time now, more credit is being destroyed than is being created and that doesn't bode well for the overall economy irrespective of what you have to say for those in it. >> well, this global economy story is such -- there's such divergence, martin. people talk about a global economy. but it's not, is it? it's a whole set of different economies at different stages in their evolution. and i much prefer to focus on the national economy, which is in a long-term comparative decline relative to the emerging economies. labor tells you that. we've got overpriced labor relative to the emerging
economies. they will have to push their labor wages up, ours will have to come down. that isn't good for economic growth in the medium term for the west. we're going to have a much flatter line of growth, as you know. the interesting thing is, i still need to understand why and this is to the point bulls, why you're still charging 3.6% on the uk government yield? why you've got 3.4% on u.s. yields? why do you need that fatter premium over where the current inflation rate is? and then you go back to our gold story, louisa, why have you got gold at the same time at 995? and the answer is, there's a deep suspicion that the only way out of this is to a major reflation. bond yields will pick up on this second after gold, gold's also got the debasement currency accent to it. but if bond yields pick up, more qe, more monetary to basement
and that means higher gold prices. it's all pretty connected right now for the west in terms of credit. >> i would challenge that on two points. rising bond yields are evidence that qe is working. ultimately what you want to do is move people out of the safety of government assets and further up the risk curve. when you do get rising bond yields, you see evidence of that in the corporate bond market. that's been empirical in the first half of this year. >> we haven't seen that. >> just against what the bank said which is about qe, 50 to 60 basis points. >> ultimately bond yields rise afterwards. but if what you say is correct, then i don't see the evidence of hyper inflation that many people are pointing to. and therefore that'd part of the reason i would be bearish on gold. >> i agree and you're not going to get that until you get wage rates pushing on supply. you're going to get that in the commodity area not in the long-term as the major powers buy into resources and increase
production of them. that hasn't happened for sometime. financing problems, thus production shortages relative to demand increases. you're going to get sort of constriction there in terms of supply and demand on commodities. but back to the inflation story. i've always said that high commodity prices are a tax on consumers. they're not inflationary in their own right, but you can't push it down into higher price, which you can't at this point in time. they're not inflation, they're just a tack. and i believe in the medium term, you need higher wage rates. >> we're on the same page with that. >> where can it come from? from protectionism down the road. >> all right. we'll have to leave it there for the time being. phillip manduka. i quite enjoyed that discussion, by the way. well, you can see all our g-20 coverage, plus more news, videos, blogs, anything moving today's market at cnbc.com. and still to come.
cadbury has rejected a $10 billion offer from food giant kraft claiming it undervalues its business. we'll have more in our global stock watch. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
on to our global equity market round-up. becky is in london, patricia's in frankfort, and adam, last but not least is in singapore. becky, huge m&a activity. >> absolutely, and the market's moving well higher as a result, up over 1.5%. cadbury, by far the biggest gainer, over 40% higher the shares of cadbury. they have received an approach from kraft via u.s. food giant. over 10 billion pounds, in fact. and that's 745 per share, as it happens. the company has rejected that approach. they're confident of their growth prospects. it would seem that kraft is still trying to come to some kind of an arrangement. there obviously is a great deal of movement in the share price, a big jump-up in the share price. the shares are trading at almost 800 p right now. let's go out to patricia and find out the stories in germany.
>> at the moment, looking very healthy, 1.5%, and volumes looking great, about 35%. did actually upgrade, did upgrade the entire sector out in europe from bullish to bearish. we do have a direct reaction in bio-stock. up about 4%, still doing very well. and then the financials doing very well up about 3.9%. being mentioned by one of the brokers reacting to a upgrade about 3.2%. s&p definitely underperforming. small stock, big moves, and something interesting in terms of upgrading the turnover forecast for singlist, that company making the machinery for the blue tech technology. blueray technology in the dvd players up at the moment about 11.6%. overall, another good day for
the german market. over to france. the top gain on the back of the cadbury story, that's up more than 5% we had in the past from the speculation in the company about nestle trying to take the company of danone. also the decline after it'd been announced on friday that the stock is going to exit on september 21st, it will be replaced by the oil services company. the stock is up 6% right now. and the company could export the first jet to sarkozy, the french president is on state visit in brazil. and before the visit the president said that talks with france, we're making progress but it is trying to -- willing to buy a plane. no confirmation at this stage. now over to adam in singapore for view on the asian markets. >> thank you very much,
stephane. thanks to the gain on wall street and the better than expected non-pharm payrolls because of the export dependence on the u.s. economy. let's turn to the greater china region, there's no short of information to digest. we had the shanghai markets coming off a little bit today, reacting, of course, to the news on friday of lifting the investment caps in terms of the qfi program. but many of the analysts saying this is more symbolic than material because it only makes up 1% of the capitalization today. hong kong saw some pretty big gains, as well, up by 1.5% by the end of trade. boosted, particularly the gold trade. in taiwan, the market to a scaling 12-month high today. but of course, the big news out, the premiere has designed, the president has accepted that resignation basically on the back of the public backlash and how the government handled typhoon morakot which killed
people in the month of august. in terms of market reaction, taking a look at tomorrow to how it does. it may not be that bad for economists saying there's no upcoming election, there may not be a reaction other than a political one. >> thank you very much, adam. well, coming up, the u.s. markets are closed today for labor day, but when they open tomorrow, will they be selling off in september or maybe some buying on the back of this activity we're seeing today here in europe and overnight in asia? well, we'll soon see whether or not the mother of all bear market rallies is over. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you ran a 500. more like a 900 v-twin.
hello, everyone, welcome back. yes, you are watching "worldwide exchange" on cnbc. our european markets, saw some buying this morning especially in some of the financials and the food and drink companies on the back of this attempt by kraft to take over cadbury, which cadbury has said no, thank you to so far. they think it undervalues the company. a lot of interest in these surrounding sectors today. the 5,100 higher by 1.5%. of course, the u.s., they're not trading today due to labor day holiday and you've also got no trade in canada and brazil, as well. the dollar cross rates at the moment. we were talking a little bit earlier to our currency guest about whether or not you should still have the risk aversion trade in place. we'll continue talking about currencies in a moment with our guest host. i know you have comments on guest currencies. but in the meantime, christine, how are the asian markets? how have they been performing? >> well, asian markets data on
friday showing that layoffs were slowing down at a much slower pace. that was because of the jobs data on friday. nikkei also getting some support also from, of course, news coming over the weekend from g-20 ministers adding stimulus measures would continue to be in place. kospi finishing flat and the market up 0.7%. a lot of encouragement or a lot of confidence there from investors that beijing will do more to support the market and the hang seng is up 1.5%, and a taiwan-weighted index up 1.4%. we had news that the resignation of taiwan premiere, the state of responsibility for the handling of the typhoon morakot which killed 1,700 people last month. this is how the picture is looking for oil. trading around the range of $67.35, up 35 cents. and brent is well trading up just a little bit in line of
what nymex is doing, $67.27 a barrel. well, joining us now, senior equity strategist, and philip n mandu manduca. philip, let me start with you first. of course the u.s. is closed for a public holiday, how do you think the market will do when it comes back to trade tomorrow? >> well, we are still rating for some sort of correction. and even surprised by the magnitude because june and july. certainly august, but now in september we will have to see how it happens. but i think the market is still way ahead of themselves. optimistic about the economy, the recovery, about earnings. after labor day, i think that they will be mostly down but i have to admit i've been saying that for a moment and a half now. it's not materialized, but we think it's on the table. and also the fact that we go
into the period of september and october, i would be very cautious of the gains of 50%. >> philip, eric writes in, we're still taking your questions, of course, firstname.lastname@example.org. and he says could you please ask your predictions of the market. we have a recovery and a global water shortage and the grains are still depressed. and he's also asking about your comments, you were talking about gold a moment ago, how unpleasant will the system be if gold, indeed, hits 2,000? >> i don't think it's going to affect the economic system to an extent. but what i do think it'll reflect and philippe has said he's been one of those guys that the market has climbed his wall of worry over the course of the last 6 to 12 months. and if you could just focus quickly on that equity comment and i'll come back to grains in a second. what have you got in september? and if the bears' best case is some celestial stuff and one of
the big pundits in the states has talked about a bad september, and talking about all kinds of corrections to whenever. and anyone else saying this is seasonal. it really isn't intellectual enough. it isn't good enough to be saying september's bad and i think the market is pretty flat to short here in terms of short-term traders. that are going to get squeezed september and october in the absence of tangible bad news. and in the absence of tangible bad news, i offer you 0% interest rates, lots of fiscal stimulus, quantityive. i think the story's mixed. it's difficult to talk about all stocks in the same space, particularly when you've got seasonal droughts going on severe in some cases. but by and large, i think there's a lot of money pouring into the commodities indices that's going to have beneficial
impact on the commodities market generally, the risk to commodity markets is what you've just seen begin in the oil market. these guys, central banks, justice of the peace governmean governments -- if those changing the rules means you can't speculate or you can. for example, only sell not buy, as they did once before, to the silver market, then you will see real risk occur. and i do believe that if you see all star pushing up through 80 and 90 again, they'll change the rules on the etfs and everything else they need to do to keep the oil prices down in initial recove recovery. >> philippe, i want to follow up with another viewer question to you. we got an extensive answer on commodities. this one in particular has to do with the banks. a viewer writes in saying it's time to dump the banks, they
dumped us and left us penniless, we should do the same to them? do you agree? >> it's difficult to disagree with that, but it's clear the sector still has problems and i think in short-term and your guest made a good point. governments and central banks around the world are doing whatever they can to stabilize the situation. they try to deflate the economy because that's the only way out. the point i tend to disagree is the short run. and they put a wall of money into the system and can continue to do that for a while. but the point is, of course, at the end somebody somewhere has to pay the billing. you will see more regulation, more taxes, eventually deficit has to be paid back. eventually monetary stimulus that's put in the system that has to be scaled back and that will make for a very slow recovery at the end. you cannot get these problems away, and that's very important to know. but for the financial sector, i clearly think, but i would not invest in the sector at the moment because it has a huge run
and i also do not like too much is that what you saw the last couple of weeks and also clearly a consequence on the speculation that we saw and the money that's put into the system. you see aig and you see fannie mae and the more speculative banks shooting 20% a day. for me that's an indication there's too much speculation in the market which is a consequence of all of the money, of course, but for me that's quite extended and very dangerous to play at the moment. >> philippe, thank you very much. philippe gisjle from global markets, philip's with us for the remainder of the hour. moving on, shares in cadbury are soaring after receiving a takeover offer from kraft foods. they have rejected the $17 billion bid from the american food giant claiming that it believes in its stand alone strategy. also says that the kraft offer fundamentally undervalues the business. the u.s. company says it's
committed working toward a recommended transaction. let's talk more about this. the senior analyst at invest tech joins us. would this make sense to you? cadbury and kraft? >> makes sense on paper. there's a lot of synergy and it's perhaps no surprise to the market that kraft decided to launch a serious bid for a company that could bring serious synergy. >> and would it ever be able to take place? when you look at some of the anti-trust regulations out there? these are two huge companies. >> yes, they are, but despite the overall size, the antitrust doesn't look that difficult to me and kraft made a very confident statement on that. where you get the most obvious competition problems. and in the u.s. where kraft are a big business, they're not a big business in confectionery. >> philip, i was talking to an earlier guest about this, just what's needed to keep the market rally going. >> it isn't just because it
creates a positive atmosphere and generates fees. it's because it creates consolidation. and consolidation creates more profitability, theoretically and often in practice. and it's exactly what you want. not just in the foods industry, but i think particularly in the financial industry. if you're talking about a real europe, far too many banks operating independently, we need lots more m&a, and the more we see, i think, the more robust our competitive capability is against the rest of the world as a region will be the neutral. >> and on from that point, is there room for more maneuver in the food and drink sector? you look at the nestles and danone, they're all looking over their shoulders to see if they should be looking over their shoulders. >> we'll see the hype, not so convinced. it has been over the run of history a lot of consolidation in the food and drink industry. the fashion these days is to focus on particular product categories. and if you look at the way the industry's structured, you have a set of pretty focussed companies out there.
we'll definitely see some share price over the next few days on the back of this. in terms of what we'll see in terms of cadbury, i would be cautious. >> it's interesting because these are consumer-related companies we're talking about. and the pessimists out there have been stay away from anything that has to do with the consumer at the moment. we're not seeing this consumer-led recovery story take hold yet. you're looking at jobless figures still continuing to go higher although they have moderated a bit. they're still pretty hefty out there. and yet, i mean nestle and cadbury rely on them. >> there's money on the table if you can unlock particularly cost synergies as kraft is saying. you can argue these are quite cheap by historic standards. one of the reasons to believe that kraft might need to make a higher offer is they're offering 19 1/2 times earnings, which is a lot. cadbury has traded as high as recently as 18 months ago. depending on your view of asset values generally, arguably this
offer's quite lowballed. >> i wonder if more money comes to the table whether or not they'll say yes. >> well, this is the key question. >> martin, thank you very much. martin, our consumer goods analyst from invest tech. right. let's focus in on japan and the trading day there from the nike. nike. >> in tokyo the, nikkei ended at 1.3% higher. investor confidence was lifted by the rise in wall street friday. the yen weakening slightly against the dollar, also helped exporters. among notable gainers was toshiba with the kninikkei repo. and the flash memory segment where it has more of a competitive edge. also a sewing machine manufacturer gained a
significant 12%. the nikkei reported it will strengthen the overseas sales for industrial equipment. meanwhile shares and consumer finance companies traded lower with both sinking to year-to-date lows. selling first on speculation that the democratic party of japan, which is set to take the reigns of government will strengthen regulations on consumer financing. in other news, the democratic party of japan's president and incoming prime minister reiterated the party's pledge for a 25% reduction of greenhouse gas emissions by 2020 from 1990 levels. the new target is greatly ambitious compared to taro aso. that's all from the nikkei business report. back to you. >> thank you very much. makiko from the nikkei. while focusing on taiwan, the president has appointed a new premiere after the resignation. we'll get analysis on the event
that killed 758 people. the entire cabinet has also offered to quit on thursday. live from hong kong, taiwan asia consulting. michael, good to have you with us. were you surprised the resignation didn't happen sooner? >> no, i think it's taken us all by surprise. we knew there was a cabinet reshuffle coming. but it was generally assumed that premier lu would be able to keep his job. it's a surprise. >> what do we know about this new premier? is it surprising, though, that the president hasz appointed a new premier so quickly? >> welm, yes and no. yes in the fact that it would suggest that he knew that premier ex-premier's resignation was coming. but no on the other hand that mr. wu is a true blue politician, a former mayor,
quite a competent administrator and would be a fairly obvious choice. a rather safe pair of hands kind of choice. >> would it be correct to assume that policy changes or policy continuity would remain intact? >> yes, more or less. what mr. mar needs, president mar, somebody competent, administrator who can run taiwan inc., while he gets on with the larger policy questions, which largely entail relationships with china. >> and speaking of china, do you think what's happened with the resignation has it affected beijing's confidence in president mar as the leader? >> i don't think there's much change in that. i don't think the chooi neesz, i don't think the fear from mr. wu. as i say, he's a politician. i think he will be a loyal supporter for president mar, so nothing to fear in that respect. >> the rest of the cabinet has offered to resign. would that create further
instability within the political picture? >> it could well do. some of them were bound to go because of their perceived bungling in the response to typhoon morakot, the defense minister, for example. but within the cabinet, there are some other competents, like the minister of communications who one hopes would stay on in some capacity. >> and how you think the market's going to react tomorrow? >> i don't see a huge reaction from the market tomorrow. i think, you know, as i said, the new premier, mr. wu is a safe pair of hands. he's proved his competence as a city administrator, at least. she he's been around for a while, knows the ropes. you might see a little dip in the market. it's an indication, i think,
that president mar's administration has been hurt more badly by the fallout from typhoon morakot than they and we thought. >> quickly, thank you very much for being with us on worldwide exchange. china asia consulting. coming up next, we'll focus on golden opportunities. what else? the precious metal below the $1,000 number. we've got more off the break. i'm here on this tiny little plane, and guess what... i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the
welcome back. gold prices are hovering around the $1,000 an ounce level. concerns about the strength of the recovery and recent volatility in the stock markets have pushed the price of the commodity higher. well, for more on gold, let's talk to mark hewlett at cornhill capital. how would you explain the spike in gold? is it just about the spike in commodities in line with that? or something else missing here? >> well, interesting move, we saw gold move higher on the weakness of other commodities.
it's been trading in a range between 920 and $960 throughout the summer. it's managed to hold up remarkably well considering the lack of physical demand we're seeing. it's more of a technical breakout than a fundamental physical demand story. but there's lots of rumors and stories last week regarding the chinese et cetera of the investors, you know, looking to move into gold. the chinese state media had a story recommending that their citizens buy gold and silver. it was enough to push the market above this sort of support resistance level and it followed through. also moved higher in other currenci currencies, sterling in particular, which is interesting. >> philip, let me bring you in. costas writes in, the cftc's drive to limit speculation. what's the worst case scenario for holders of gold and cts?
and let's talk about the currency data and whether or not that's going to be an indicator of global improvement. >> sure, i still think the best way to hold golds remains in things like we talked about with this sort of physical gold. a lot of people do want that the etfs. but when you're being presented physical gold by the likes of the birmingham mint, why wouldn't you take it? because the rulers that be can change the rule and they've tried to do that with ets. there's a risk, not a big risk, but if gold becomes a problem to the system, they'll change the rules. with regard to issues of currency, right now you've got to play the reflation trade. and i'm sorry for the sterling bears out there, but the reflation traj best expressed by sterling, and you're going to get it back up to 170, you're going to get euros probably still hovering in the 85 to 88
range, but upward pressure against the euro. and i do think that sterling's a story in the short-term that's going to benefit very well. >> all right. i want to pose this question to mark because philip i know you said you're expecting gold to reach $2,000 by the end of next year. mark, do you share that view? >> i think short-term we've got maybe a small correction. but it depends on the time horizon. by the end of next year, 2,000, is remarkably bullish, but i wouldn't bet against it. >> all right. well, i'll leave it there. mark, thank you very much for that. mark hewlett, cornhill capital. and philip manduca. well, that's it from this end of things, i'm louisa bojesen in europe. >> and here in asia, i'm christine tan. thanks for your company here on "worldwide exchange." welcome to the now network. population: 49 million.
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